Ecommerce set for slowdown, says Verdict
Online retailers have “had it easy” over the last decade, but that’s all set to change as growth in ecommerce slows down in years to come. That’s the judgement from analysts at retail consultancy Verdict.
In its eRetail 2010 and Beyond report, Verdict predicts a ‘significant’ slowdown in the growth of online shopping thanks to the maturity of the market and increased competition.
Spending on the web will continue to increase by more than 56% to £35bn over the next four years, it forecast, and it will also continue to outpace total retail. But the rate of that increase will slow considerably from an average of 35% a year over the last decade to 12% a year between 2009 and 2014. And though by 2014 there will be 32.5m UK shoppers, that’s only four million more than at the moment, as the market reaches maturity.
Malcolm Pinkerton, senior retail analyst at Verdict, said: “With the number of people shopping online becoming highly saturated, retailers will have to change and evolve their online strategies. Driving loyalty and increasing spend per head across all age groups will become vital factors to ensure growth.”
The group says the highest-spending group of customers, those aged 34-44 and likely to have young families, are most likely to cut back in the face of forthcoming government cuts.
Instead, it sees more potential in the 15-24 and 55+ groups. To meet the demands of the younger age group, retailers must focus on use of pictures, video and mobile, while the older group wants a service-oriented customer experience linked to brands they already trust.
Multichannel retailers are at an advantage, since they operate 14 of the 20 most-used shopping sites.
Senior retail analyst Sarah Peters said: “The online shopper is extremely valuable. Retailers have had it relatively easy online over the past decade because of the channel’s rapid growth and lack of competition, but just as in overall retail, the next five years will be much more challenging.”
Jeff Dakin, managing director of customer loyalty specialist Htec, said: “With the outlook for a more measured rate of growth in eRetail, the ingenuity of UK retailers will clearly be tested over coming years.”
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“Multichannel retailing has enabled retailers to enjoy a period of growth, particularly through the boom in online shopping, but given that there are a finite number of shoppers, this growth was always going to slow. BT Expedite believes that the opportunity for retailers now is to ensure that their many channels are working seamlessly as the customer experience in-store or online will play a critical part in shaping customer confidence and loyalty and wallet share to a particular brand. With segments of the population such as the over 45’s still under-represented in the online space, shopping convenience, a trustworthy reputation on the High Street and a greater understanding of the customer is crucial in targeting this market. Furthermore, the emergence of new ways of shopping such as mobile and assisted selling means that a truly joined up multichannel solution is pivotal to growth.”
Jason Shorrock, Programme Director for Multichannel Retail, BT Expedite
It surely can’t be too surprising that the rate of growth will slow down. This is inevitable as use of the internet matures. The fact it is still projected to growth 56% over the next four years, as the wider economy is probably fighting to come out of recession is admirable I would say. How many other sectors wouldn’t love that!